A transformative period in Iran’s oil industry was heralded by the entry of an international oil consortium, initiating a new era in exploration, refining, and global marketing of Iranian oil, characterised by a shift from British to predominantly American leadership. The consortium’s early initiatives included transferring all non-industrial services, such as education, health, and housing – previously managed by the Anglo-Iranian Oil Company – to a newly established department within the National Iranian Oil Company, now known as the Organisation of Non-Industrial Tasks. Additionally, the consortium significantly reduced the industry’s workforce, leading to widespread unemployment among various worker segments in Iran. This economic downturn, where the rising cost of living was unaligned with wages, incited labour protests within the oil industry. The analysis also probes into a significant challenge faced by the Iranian government and its primary supporter, the United States: navigating the substantial hurdles during this era. This examination offers profound insights into the complex interplay between international business interests, local economic conditions, and labour dynamics amid the geopolitical shifts that were reshaping the socio-economic landscape of Iran during this critical juncture.

This chapter examines the consolidation of Pahlavi rule after the removal of Reza Shah from power, especially after 1953, when the reign of Mohammad Reza Pahlavi was reestablished following a CIA-sponsored coup. The chapter explores the tenuous beginnings of the reign of the new Shah, the increasing legislative and policy-making significance of the Majles in the 1940s, and the era of oil nationalization, from 1951 to 1953. Prime Minister Mohammad Mosaddeq was successful in getting the powers of the monarchy to be significantly reduced, but his overthrow was followed by the restoration of absolute monarchy built on a massive army and a feared secret service called SAVAK. Ultimately, however, the Pahlavi state failed to incorporate within its orbit and its social base remained weak. As the oil revenues began to lag, and the state was forced into making “housecleaning” concessions, it began to crumble under the weight of the gathering storm.